UK ascension into the CPTPP trade group
What does this mean for UK SMEs?
On 16th July 2023, the UK achieved a huge milestone, ascending into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade block, which is worth £12 trillion in GDP.
The UK is the first European member and the first new member to join since CPTPP was created. It spans 13 economies and is an important milestone the UK population and business community, with one in 100 UK workers employed by CPTPP-owned businesses in 2019, which equates to 400,000 jobs – a figure that is only likely to increase as a result of the deal.
Reduced tariffs on imported goods could also lead to cheaper prices for British consumers on high-quality products, such as fruit juice from Chile and Peru and chocolate from Mexico.
Some of the expected positive outcomes of this signing for UK SMEs looking to trade internationally include:
- 99 percent of current UK goods exports to CPTPP countries will be eligible for zero tariffs. This is positive news for industries such as dairy farming, with reduced tariffs on cheese and butter exported to Canada, Chile, Japan and Mexico – an export industry worth £23.9 billion already exported to these countries in 2022.
- A reduction in red tape – UK firms will not be required to establish a local office or be resident to supply a service in these markets.
- Modern ‘rules of origin’ could make British businesses more competitive by allowing them to trade more freely with CPTPP territories.
- Investment between the UK and CPTPP countries is expected to increase inward investment to the UK from CPTPP countries, which were already worth £182 billion in 2021.
- CPTPP sets modern rules for digital trade across all sectors of the economy and will support UK businesses of all sizes to seek new opportunities in CPTPP markets.
- This will be the first time we will have a free trade agreement with Malaysia, giving businesses far more access to an economy worth £330 billion in GDP in 2022.
- Tariffs of around 80% will be eliminated on UK exports of whisky within 10 years.
- Tariffs of 30% on UK exports of cars will be eliminated within 7 years, helping the UK to get a larger share of the automotive market.
The signing of the agreement is formal confirmation, and the next step will be for the agreement to be ratified in Parliament, before entry into force.
The Department for Business and Trade’s UK Export Academy is running a free session to learn about CPTPP and the benefits of the deal. Sign up here.
Find out how to sell internationally and benefit from free trade agreements.